Let’s look at the numbers in the mayor’s latest budget

Mayor Martin Walsh’s recommended General Fund operating budget for fiscal 2017, starting July 1, totals $2.97 billion, an increase of $114.8 million, or 4.0 percent, over the prior year’s budget. This is a more thoughtful budget after two years in office. Service consolidations and new initiatives are recommended to achieve greater operational efficiencies.

The budget is labor intensive, with salaries and benefits representing 77 percent of the total recommended number. Ongoing negotiations with all but the firefighter and EMT unions may further increase departmental budgets and spending beyond the budgeted collective bargaining reserve when contracts are signed.

Revenues - The city continues its practice of building a budget around conservative revenue estimates, which is prudent with the uncertainty of final negotiated contracts and planned savings. Of the operational revenue growth of $114.8 million, 93 percent comes from the city’s own revenue sources. The net property tax levy of $2.02 billion represents 68 percent of total operating revenue and 82 percent of the total revenue increase in fiscal 2017. The property tax levy growth of $93.6 million is a 4.9 percent increase, of which practically half is from new development.

State aid of $432.2 million, the city’s second largest revenue source, accounts for 14 percent of total General Fund revenue, but only seven percent of the total revenue increase. Over the past five years (FY11-FY16) city spending has increased by 17.9 percent while gross state aid has only increased by 7.3 percent. The excises for motor vehicles, room occupancy, jet fuel, and meals are growth revenues representing 10 percent of the city’s total revenue growth, but only 6.4 percent of total revenues.

Expenses – While $2.97 billion is a large number, the city’s expense budget is similar to the revenue budget with just a few accounts representing a large share of the total. Eight budget accounts make up 85 percent of the total budget and 88 percent of the total increase. The eight accounts are the four departments of School, Police, Fire and Public Works and the health insurance, pensions, debt service and state assessments (MBTA and charter school tuition) accounts. The budget is dominated by personnel expenses and is expected to support 17,132 FTE positions by January 1, 2017.

The School Department budget is the largest, and this year the most controversial. The number for fiscal 2017 is $1.027 billion, an increase of $13.5 million, or 1.3 percent, and represents 35 percent of the total city budget. With school spending increasing faster than revenues, cuts have been made in non-academic and central budget areas in recent years. For fiscal 2017, some cuts are planned for the schools. This same scenario will be repeated in future years unless the School Department takes meaningful steps to address its excess capacity with plans to consolidate classes and close schools.

The Police Department budget of $356.3 million represents an increase of $23.8 million, or 7 percent. However, $17 million of that increase is due to an increase in the overtime budget. When next year’s budget is compared to the city’s estimate of the final number this year after total overtime is included, the fiscal 2017 Police Department budget represents an increase of 1.1 percent. For both the Police and Fire Department budgets, the overtime numbers are increased with the expectation that the departments will successfully reduce overtime hours and manage within those budgets. This is an initiative worth watching.

The City Council is currently reviewing the mayor’s recommendations and will need to vote on the budget by June 29, its last scheduled meeting before the start of fiscal 2017 on July 1. The Council is expected to approve the mayor’s budget, although a few councillors may seek additional resources for the schools. Such a decision would require the mayor’s approval and cuts in other accounts or additional aid from the final state budget.

Samuel R. Tyler is president of the Boston Municipal Research Bureau.